The Zions Bank Wasatch Front Consumer Price Index increased 0.8% from May to June on a non-seasonally adjusted basis.
Year over year, the Wasatch Front Consumer Price Index has grown 3%, showing slowing annual growth for the fourth consecutive month. Nationally, the Consumer Price Index has increased 1.6% since June of last year.
Rising prices in the transportation and housing sectors drove up the cost of living along the Wasatch Front from May to June. Transportation prices jumped 2.6%, due almost entirely to increases in vehicle prices. While vehicle prices typically go up in June as newer models replace older models, transportation prices are down 1% from June 2018, a result of lower insurance rates and slightly lower gas prices.
Housing prices rose 0.8% in June. The jump is unusual not just because it is a higher-than-average month-to-month increase, but also because housing prices typically dip slightly in the month of June. The 0.8% surge, due almost entirely to rising apartment rental rates, is the largest seen in the month of June since 2014. The 12-month change in housing prices rose to 5.3% from 4% in May, ending the six-month streak of lowering year-over-year price increases.
“Interest rates can significantly affect how much home buyers pay for their mortgage,” said Scott Anderson, president and CEO of Zions Bank. “We expect the recent drop in interest rates to have a positive effect on home prices for homeowners across the Wasatch Front.”
Similarly, sinking interest rates could be good news for renters, if the state can keep up with housing demand.
“In terms of renting, we generally expect rental rates on apartments to decrease with the drop in interest rates, as some buyers are able to purchase a home, rather than rent,” said Randy Shumway, chairman and partner of Cicero Group. “But we are seeing something different in Utah currently, likely due to Utah’s current imbalance between housing demand and supply. For most of the past 10 years, homebuilders in Utah have accelerated their pace of building, but there continues to be a gap between need and housing stock.”
Analysis and data collection for the Zions Bank Wasatch Front Consumer Price Index and the Zions Bank Consumer Attitude Index are provided by Cicero Group, a premier management consulting firm based in Salt Lake City.